Forward electricity prices in the West have dropped as record hydro generation continues to dampen power values.

As of May 1, Mid-Columbia forward electricity prices for July and August are $31.20/MWh, which is 34 percent less than last summer, according to FERC's "Summer 2011 Energy Market and Reliability Assessment." South of Path 15 forward prices are $47.03/MWh, 5 percent below prices last summer, while Palo Verde prices, at $44/MWh, are 8 percent below last summer.

Although forward electricity prices do not predict day-ahead prices, they do reflect market dynamics, FERC stated. Abundant snowpack in the Pacific Northwest and British Columbia means plentiful hydropower throughout the summer. Excess hydropower might cause congestion on the Pacific AC and Pacific DC interties, FERC stated, though the effect should be limited in California because of relatively robust internal supplies. Although California routinely relies on Northwest power imports, FERC estimates they will decrease this summer. California snowpack, as of April 28, was 171 percent of normal.

This week the Bonneville Power Administration periodically cut wind generation to cope with a surplus of hydro. Approximately 12,400 MWh of wind was cut during three separate periods May 18-20. Wind producers were not paid.

BPA anticipates more curtailments as the spring runoff season continues in high gear.

Natural gas forward prices are 40 to 70 cents per MMBtu higher than last summer. FERC stated that production increases such as from shale gas may be just enough to offset demand growth, and noted that storage levels remain 8 percent lower than last year at this time. Working natural gas in storage rose to 1.919 Tcf by Friday, May 13, after a 92 Bcf net injection, according to the U.S. Energy Information Administration. This is the largest addition to gas stores since the official injection season, but storage remains below last year and the five-year average.

In the Friday-to-Friday trading period, May 13 to May 20, here's how average peak power prices fared:

Mid-C: Earned almost $4.50 to $23.60/MWh.

California-Oregon Border: Up $1.75 to about $26.35/MWh.

NP15: Lost $2.25, ending at $31.75/MWh.

SP15: Dropped roughly $3.75 to $32.15/MWh.

Palo Verde: Off 60 cents to $33.80/MWh.

Off-peak prices took a beating this week. Both Mid-C and COB prices traded in the negative; California prices gained a few dollars by Friday after trading in the range of $5/MWh.

What's ahead: Seattle and Portland will see temperatures in the 60s through Wednesday. Rain returns to the region by early Thursday. Sunny skies and temperatures in the 60s are anticipated for the San Francisco area starting Monday, with a slight chance of rain by week's end. Southern California temperatures remain below seasonal norms until Tuesday, when gradual warming should bring temperatures to near normal
[Linda Dailey Paulson].

Archives of the Western Price Survey for the past year are also available online.

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